Blows just keep on coming

Date: January 17 2013

Gareth Hutchens

NEARLY 1200 jobs have been axed in recent days as some of Australia's best-known companies adjust to the weakening economy.

The cuts come as economists await the release of critical jobless figures on Thursday that are expected to show a rise in unemployment. But this is unlikely to convince the Reserve Bank to cut rates when it meets next month, economists say.

Boral, which makes building products such as bricks, roof tiles and doors, on Wednesday announced plans to cut 700 back-office jobs, as part of efforts to ''right-size the business'' to fit the struggling local building sector.

One-third of the job cuts would come from New South Wales, said chief executive Mike Kane, while Victoria and Queensland would account for 20 per cent more.

Former RBA board member Warwick McKibbin said that instead of monetary policy, the federal government needed to use taxation more effectively to help to improve productivity by reducing the costs of labour, capital and energy.

''The issue is really an issue on the fiscal side, rather than on the monetary side. And you don't solve a fiscal mistake by making a monetary mistake,'' he said.

The news came days after BlueScope Steel announced plans to sack 170 workers in coming months as it moved to reconfigure its steel production plant at Hastings, south-east of Melbourne. About 110 employees and 60 contractors, from a workforce of 470, are expected to lose their jobs.

Acting Employment Minister Kate Ellis said the federal government was poised to announce its response to the manufacturing taskforce report commissioned by Prime Minister Julia Gillard last year.

''There has been a full and a widespread review and we'll be looking at announcing a response to that inquiry in the near future,'' Ms Ellis told reporters in Adelaide.

Also on Wednesday, Vodafone said it planned to close its Crazy John's chain of mobile phone stores by late next month, in a move that will affect up to 300 jobs.

It is understood about 40 of 60 Crazy John's shops could be closed, with those remaining to be rebranded as Vodafone shops.

The wave of job losses comes as housing finance figures this week showed a 0.5 per cent decline in the number of home loans in November, and as the ANZ job ads series fell 3.8 per cent in December, the 10th consecutive month of declines.

St George Bank chief economist Hans Kunnen said any rise in unemployment figures on Thursday is still unlikely to convince the Reserve Bank to cut rates at its next meeting, in February. Economists are tipping jobless numbers to rise to 5.4 per cent, from 5.2 per cent.

''We think the RBA will hold off because of the global backdrop. There's less nervousness about Europe and America,'' Mr Kunnen said.

''The RBA will be waiting to see the full impact of its previous cuts … [but] they will possibly be disappointed with the next lot of jobs figures and come April, we think they will move again [by cutting 25 basis points].''

However, Mr McKibbin did not think the central bank should cut rates again.

He said any further interest rate cuts would be unlikely to fix the problems we were now seeing.

''There's a structural adjustment going on and the effectiveness of monetary policy is being offset by substantial portfolio shifts which are keeping the Australian dollar from falling,'' he said.

''All cutting rates will do is lead to a misallocation of capital within the economy and won't actually change the fundamental story.''

Consumer sentiment data released on Wednesday showed households were uninspired by the RBA's most recent rate cut, in December, rising just 0.6 per cent in January, and placing the level of consumer sentiment near its long-term average.

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